The FCC is expected this week to end a monopoly that has contributed to the high price of cable and broadband service in the
U.S. The federal agency is expected to outlaw exclusive contracts between cable companies and apartment buildings, a common practice that has served to shut out competitors and limit consumer choices.
About 25 percent of Americans live in apartment buildings, but they are concentrated in cities, where the proximity of customers makes cable services far more profitable than running cable to individual homes in suburban settings.
U.S. residents pay far higher rates for cable and broadband services than in many other industrial countries. A bill of $100 a month or more is not uncommon for a so-called triple play of TV, telephone, and broadband service. No wonder a recent Organisation for Economic Co-Operation and Development ranking of broadband penetration left the U.S. ranked No. 15 in the world at the end of 2006, well below Denmark (No.1) and the Netherlands (No. 2). Some have disputed this ranking, but one foundation’s interpretation of the numbers lifted the U.S. to No.12, hardly a ringing endorsement.
By contrast, several companies in France offer a combination of all three for around 30 euros ($42). A recent offer from Free, one of the ADSL providers in France, includes 28 megabit download speed, unlimited phone calls to 70 countries, and 70 digital TV channels.
Offers by companies such as Free are possible because many European governments have forced the phone companies to make their infrastructure available to third-party broadband providers at a reasonable price, something U.S. carriers were largely able to block. The result is that most Americans have just two choices in broadband services: cable or the phone company. And many phone carriers have not had the bandwidth to offer the range of television services available on cable systems.
U.S. carriers’ attempts to sell TV services have been disappointing so far. Verizon, the No.2 U.S. carrier, has aggressively rolled out fiber optic lines in urban areas to be able to offer a full range of IP-based services. And AT&T has also been pushing its U-verse TV service but still has just 125,000 customers. But prices for bundled services can still add up to well over $100.
Opening apartment buildings to competition may not solve all of our problems in getting cheaper broadband, but it’s a step in the right direction.